June 16, 2017
President Trump’s workforce development week has sparked a lot of innovative ideas for expanding American apprenticeship, and though the president’s Executive Order on apprenticeship has commanded the most attention, it’s not just the White House that’s making moves. On Wednesday, Senators Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) dropped a new bill that provides some fresh ideas for growing apprenticeship.
The main feature of the Apprenticeship and Jobs Training Act of 2017 (attached below) is a tax credit intended to encourage new apprenticeship programs and to reward existing ones for expanding. The bill also includes provisions aimed at making it easier for veterans to complete apprenticeship programs, and reporting requirements that would help government and apprenticeship practitioners better assess both the impact of all registered programs as well as the effects of the bill’s incentives. Most interesting of all, the bill addresses a crucial but often-overlooked challenge for building quality apprenticeship programs: recruiting, training, and retaining the employee mentors without whom apprentices can’t succeed.
The tax credits provided in the bill are generous—up to $5,000 per apprentice for up to three years—but also smartly designed. Employers starting up an apprenticeship program get tax credit for every apprentice they bring on in the first year, but as their program matures they only earn credit for apprentices added on top of their average count from the past three years; the same goes for employers who already have programs up and running. This tiered approach means a guaranteed incentive for newcomer employers to buy into apprenticeship, and a short-term boost for existing programs, but only so long as employers keep building on what they’ve established.
Tax credits for apprenticeship programs are already available in 12 states across the country; Wednesday’s bill proposes something very similar to those and to the LEAP Act submitted in February by Senators Scott (R-S.C.) and Booker (D-N.J.). Such incentives are a popular and straightforward means of sweetening what is already a tempting human capital strategy for businesses looking to compete and succeed in the long term. Though other supports are necessary to ensure success among apprentices—especially young ones—tax credits are a signal to employers that the federal government supports industry-driven work-based learning, and thus money well spent.
The bill’s accountability requirements would assess the impact of tax credits on apprenticeship growth in terms of the number of apprentices who complete their programs and their labor outcomes. That evidence-based reflection is crucial for such a generous program, but another interesting quality of these provisions is the requirement that programs qualifying for tax credits report how many completing apprentices stay with their employers and within the field in which they received training. That would provide some important insight into the still-murky research questions of apprentice mobility, industry alignment, and retention.
The bill also includes a provision that allows sponsors to provide prior learning credit for U.S. servicemembers. Though it can be a struggle, members of the Armed Forces already have some good options for converting their military experience into college credit. But in spite of those academic options, and a well-established military apprenticeship program, there isn’t yet a way for servicemembers to get apprenticeship credit for their prior military learning. Though the legislation can’t require sponsors to provide apprenticeship credit for past service, it does require them to consider it. With time, we could expect employers to get used to validating and awarding credit for military service, with the result of more well-paid, high-skill apprenticeships for veterans and current servicemembers.
The most innovative proposal in the bill’s language involves apprenticeship mentors and older workers. Mentors provide critical on-the-job training for apprentices, ensuring they make progress and integrate well into the workplace. Older workers are valuable for their professional and organizational experience, but also much more expensive than junior colleagues: when firms look to downsize, older workers’ hours are often the first to get cut.
The Cantwell-Collins bill proposes a creative (and to our knowledge unprecedented) incentive to provide a crucial apprenticeship role for senior employees facing cuts. Training employees to be mentors is a complex and long-term process, and before that process begins, employees have to sign up for it first. The bill’s mentorship incentive could help to resolve the problem of mentor supply that American apprenticeships are likely to face as more and more employers use the model to build their workforce.
It would do this with a provision that allows well-qualified employees over 55 whose working hours are “substantially reduced” to draw on their pension plan if they devote at least 20 percent of their remaining hours to apprentice mentorship. How much a mentor employee’s hours must be reduced to qualify would be up to the discretion of the Secretary of Labor; the best move would be to make the threshold low so as to encourage as many mentors to enroll as possible. Balancing the needs of business and the interests of older workers (who often struggle to find new work if laid off by a longtime employer), the bill offers an alternative to wholesale layoffs as well as a boost to apprentice mentorship.
The solution isn’t perfect, of course, firstly because the incentive only applies to workers whose hours get cut. What’s more, fewer and fewer Americans working for private employers have defined benefit pensions apart from Social Security; for those who do, the benefit is potentially lucrative, but again relatively few would qualify. The incentive is a remarkable idea and a great start, but might not put a dent in mentor shortfalls if apprenticeship really takes off. A stronger and more broadly applicable incentive might specify a low minimum weekly hour reduction of four or eight hours and—keeping the 20 percent mentorship quota–provide a similarly generous tax credit instead of a pension distribution.
Still, however this bill fares—and wherever the White House’s pronouncements take us—it’s refreshing to see innovative, bipartisan policy responses to the easy fixes and tricky down-the-road concerns for American businesses and learners interested in apprenticeship.
Following our Apprenticeship Forward conference on May 4-5th, this is the ninth installment of our blog series exploring big issues in the world of American apprenticeship. We hope you'll join the discussion @NewAmericaEd.